Daewoo moved into the construction sector, helping to create the new village movement, which was a part of Korea's rural development program. The corporation was also able to take advantage of the growing markets within the Middle East and within Africa. Daewoo was given its GTC designation at this time. Major investment assistance was provided by the government of South Korea to the company in the form of subsidized loans. South Korea's strict import controls angered competing nations, but the government knew that, independently, the chaebols will never survive the global recession caused by the 1970's oil crisis. Protectionist policies were essential to ensure that the economy continued to grow.
Daewoo's move into shipbuilding was required by the government, even if Kim felt that both Samsung and Hyundai had better skill in heavy engineering and was more suited to shipbuilding compared to Daewoo. Kim did not want to assume responsibility for the biggest dockyard within the world, at Okpo. He stated a lot of times that the government of Korea was stifling his entrepreneurial instinct by forcing him to carry out actions based on duty instead of profit. Despite his reluctance, Kim was able to turn Daewoo Shipbuilding and Heavy Machinery into a really profitable company producing competitively priced ships and oil rigs on a tight production timetable. This happened in the 1980s when the economy in South Korea was experiencing a liberalization stage.
The government during this time was reducing its protectionist measures that helped to fuel the rise of small businesses and medium-sized businesses. Daewoo had to divest two of its textile corporations at this time and the shipbuilding business was starting to attract more foreign competition. The government's objective was to shift to a free market economy by encouraging a more efficient allocation of resources. Such a policy was meant to make the chaebols more aggressive in their worldwide dealings. However, the new economic climate caused some chaebols to fail. One of Daewoo's competitors, the Kukje Group, went into liquidation during the year 1985. The shift of government favour to small private companies was meant to spread the wealth which had before been concentrated within Korea's industrial centers, Pusan and Seoul.